Do Managers Withhold Bad News?

Do Managers Withhold Bad News?

In this study, we examine whether managers delay disclosure of bad news relative to good news. If managers accumulate and withhold bad news up to a certain threshold, but leak and immediately reveal good news to investors, then we expect the magnitude of the negative stock price reaction to bad news...

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Veröffentlicht in:Journal of accounting research 2009-03, Vol.47 (1), p.241-276
Hauptverfasser: KOTHARI, S. P., SHU, SUSAN, WYSOCKI, PETER D.
Format: Artikel
Sprache:eng
Schlagworte:
Analytical forecasting
Business accounting
Business management
Capital management
Coefficients
Disclosure
Dividends
Financial accounting
Financial information
Financial management
Financial reporting
Information asymmetry
Investments
Investors
Litigation
Managers
News
Stock prices
Studies
U.S.A
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Beschreibung
Zusammenfassung:In this study, we examine whether managers delay disclosure of bad news relative to good news. If managers accumulate and withhold bad news up to a certain threshold, but leak and immediately reveal good news to investors, then we expect the magnitude of the negative stock price reaction to bad news disclosures to be greater than the magnitude of the positive stock price reaction to good news disclosures. We present evidence consistent with this prediction. Our analysis suggests that management, on average, delays the release of bad news to investors.
ISSN:0021-8456
1475-679X
DOI:10.1111/j.1475-679X.2008.00318.x